The basics
A prediction market is a marketplace where the product is information. Each market poses a question with a defined outcome. Traders buy and sell shares that represent each possible answer. When the event resolves, every share of the correct outcome pays out one dollar. Shares of the wrong outcome go to zero.
Because the maximum payout is fixed at $1, prices stay between 1¢ and 99¢. The price you see is the market's collective estimate of the probability. A share trading at 73¢ means the market thinks there's a 73% chance of that outcome being right.
That's the whole structure. Everything else - the categories, the fancy charts, the on-chain settlement - is built on top of this one mechanic.
Shares and pricing
Every market has two or more outcomes. For a binary market, there's a Yes share and a No share. They always sum to $1. If Yes is trading at 60¢, No is trading at 40¢. That accounting identity is what makes the math clean.
What the price actually means
A market price is not an opinion from a bookmaker or an analyst. It's the last price someone was willing to pay - or accept - in a live order book. Every traded penny is an active vote with real money behind it. When new information arrives, prices update because someone is willing to pay more or sell for less.
Why prices reflect probability
If you think a Yes share is undervalued at 30¢, you'd buy it. If enough traders agree with you, the price rises. The opposite holds on the other side. Over thousands of trades, the price drifts toward an equilibrium that reflects the aggregate best guess of the people putting money down. That equilibrium is what makes prediction market prices useful as forecasts.
Placing a trade
Trading on Polymarket follows the same pattern as any exchange order book. You pick a market, choose a side, decide on size, and submit.
Market orders
A market order fills at whatever price is available right now. Fast, but you take what the book gives you. Good when you want certainty of execution and the spread is tight.
Limit orders
A limit order is a standing offer at the price you specify. It rests on the book until someone agrees to trade with you, or until you cancel. Better for entering at the price you actually want, especially when liquidity is thin.
Exiting a position
You don't have to hold to resolution. At any time, you can sell your shares back to the market at whatever the current price is. If you bought Yes at 30¢ and the price moves to 55¢, selling there locks in your gain regardless of how the event ultimately resolves.
Resolution
Resolution is the moment of truth - when the event actually happens and the market gets settled. Every market on Polymarket has its resolution rules published before you can trade it. The rules name the source of truth, the deadline, and the handling for edge cases.
How payouts work
When a market resolves Yes, every Yes share is redeemed for $1 and every No share is worth $0. The opposite holds when a market resolves No. Multi-outcome markets work the same way: the winning outcome pays $1 per share, all others go to zero.
What happens with disputes
If there's an ambiguity in how an event played out - say, a key data feed gets delayed or contested - the resolution goes through a review process. Anyone can flag a market and submit evidence. The decision applies the published rules of that specific market. Because resolution is on-chain, the entire history is auditable.
Markets that get cancelled
Occasionally a market becomes unresolvable - the event is cancelled, postponed indefinitely, or the resolution source disappears. In those cases, trades are reversed and funds returned to participants based on their net position. The rules for cancellation are spelled out in each market's resolution criteria.
Deposits and withdrawals
Polymarket settles in stablecoin on an on-chain wallet you control. You fund your account once, trade against the wallet balance, and withdraw whenever you want.
Funding your account
You can deposit by transferring stablecoin directly to your wallet address, or by using one of the on-ramps integrated into the platform that convert fiat to stablecoin for you. Funds usually arrive within minutes once the network confirms the transaction.
Withdrawing
Withdrawals are a single on-chain transfer to whatever address you control. No approval queue, no holding period. You pay the standard network fee on the chain you're using.
What "self-custody" actually means
Your funds sit in a wallet whose keys you hold. Polymarket doesn't take custody of trader balances. The trade-off is that you're responsible for your own credentials. Treat your wallet the way you'd treat the password to your bank.
Strategy and risk
You don't have to be right more often than the market. You have to be more right than the market on the trades you actually take. The traders who do best on Polymarket tend to have three habits in common.
Trade only what you know
Specialists beat generalists. The trader who has been watching a particular sport for a decade, or who reads every Fed statement line by line, has an edge that random traders don't. Find the corner of the world where your view is sharper than average, and trade there.
Size for the truth, not the win
Bet sizes should reflect how confident you are and how much capital you can lose. Even a great edge loses money when the position is too large. Risk what you can afford to lose, and treat each market as a separate bet rather than a personal cause.
Watch the line, not the score
Markets reprice constantly. A trader who pays attention to where the line is moving can often exit at a profit even when the eventual outcome goes against the original view. The pros think in terms of expected value across many trades, not the outcome of any single one.